3.2 percent GDP growth

REAL Gross Domestic Product (GDP) growth in 2017 is focused to be around 3.2 percent says Minister of Finance and Treasury John Maneniaru.

Delivering his statement on the government’s Finance and Economic update on Parliament yesterday, Maneniaru said this reflects continued strong growth in agriculture, fishery, logging, construction and service sector.

He said although fuel price rise slowly, it is still around USD$50 per barrel.

Maneniaru said inflation as measured by Honiara consumer price index decreased in year average to 0.6 percent in 2016 largely driven by sharp decline in global energy and commodity prices as Solomon Islands is vulnerable to those external price.

“Real GDP in 2018 is focused to around 3.5 percent, an average around 3 to 4 percent over the medium term or into stabilisation in the level of log production.

“Business investment is focused to progress to increase over the next couple of years. This is inline in work commencing in a number of infrastructure and investment particularly in the transport and energy sector.

“The ongoing work in investment in private and public infrastructure will force the productivity growth and lower the cost of doing business. In 2017 Solomon Islands Current Account Deficit (CAD) is now expected to narrow slightly to around 4 percent of GDP from 5 percent of GDP in 2016.”

The Finance Minister said improvement in the balance of income and current account transfer balance are expected to be the main drivers of the CAD. He adds, the lower price of oil imports has helped to offset the impact of weak export growth on the overall trade balance.

“The balance of trade in goods is expected to be narrowed in 2017 by around 52 million as compared to 108 million seen in 2016. This downward trend reflects the expected decline in value of exports and increase in value of imports in 2017.

“The CAD is expected to whitened around 5 percent in 2018 and 6 percent in 2019. This is in line with the stabilisation in the value of log export, stabilisation of donor in flaws, expected increase in the value of oil imports and the impacts from the large projected investment projects.”

He said the key risks to the Solomon Islands economic outlook reflect low fiscal and external purpose and subdue investor.

“At present sustain levels of moderate economic growth rely disproportionately more on expansionary fiscal policy and unsustainable logging. Years of unsustainable logging have heightened the risks of an eventual collapse that may be more rapid and disruptive on the economy than previously anticipated.

“In the long run a slowdown in logging will pose a significant risk to the macro economic outlook in the economy, especially as it accounts for the growing share of exports,” he said.

Maneniaru revealed that over the years Solomon Islands has faced significant challenges to infrastructure service providers.

More than 60 percent of population has lack of access to economic activities and over 70 percent of the population has no access to electricity, roads and other services.

He assured that over the next few years, projects that could support social and economic development are the Tina River Hydro development project, submarine cable project and Solomon Islands Electricity Authority capital project.

Maneniaru said the outlook for Solomon Islands economy is for growth to average between 3 to 4 percent per annum over the medium term.

However given the high rate of population growth to 0.3 percent, this rate of economic growth will not be sufficient to generate substantial improve means in the living standards of Solomon Islanders.

“Broad based growth that raised the benefits of economic development should remain the top priority of the DCCG, given expenditure pressures and the challenges for the government will be to strengthen a balance between the need to generate sustainable revenue and ensures that funds are directed to quality spending, while at the same time ensure that this does not discourage potential investors and investment on essential services and key infrastructures,” he said.

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